http://www.nytimes.com/2006/04/11/world/europe/11france.html
Chirac Will Rescind Labor Law That Caused Wide French Riots
By ELAINE SCIOLINO
Published: April 11, 2006
PARIS, April 10  President Jacques Chirac crumbled under pressure from
students, unions, business executives and even some of his own party leaders
on Monday, announcing that he would rescind a disputed youth labor law
intended to make hiring more flexible.
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Pool photo by Jack Guez
Prime Minister Dominique de Villepin said that it was no longer feasible to
maintain the law.
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Video: France Drops Labor Law
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News Analysis: In France, an Economic Bullet Goes Unbitten (April 11, 2006)
The retreat was a humiliating political defeat for both Mr. Chirac and his
political protégé, Prime Minister Dominique de Villepin, underscoring the
paralysis of their center-right government 13 months before presidential
elections.
It also laid bare the deep popular resistance to liberalizing France's rigid
labor market, and makes any new economic reform politically impossible
before a new government is in place, and perhaps not even then.
"Dead and buried," is how Jean-Claude Mailly, leader of the leftist union
Force Ouvrière, described the fate of the labor law. "The goal has been
achieved."
The cancellation of the law, which Mr. Chirac signed April 2, is aimed in
large part at bringing an end to two months of major protests and strikes
throughout France that have shut down universities, threatened to hurt
tourism and the economy, and brought violent clashes between young people
and the police.
Still, a student protest march scheduled for Tuesday will proceed as
planned, and students at several French universities voted Monday to
continue blocking access to classes, demanding more concessions from the
government in work practices and job security.
"Today is a defining victory, but there are still many issues outstanding,"
said Bruno Julliard, who heads UNEF, the main student union.
The new law was intended to give employers a simpler way of hiring workers
under 26 on a trial basis without immediately exposing companies to the
cumbersome and costly benefits that make hiring and firing such a daunting
enterprise. Opposition to the law reflects the deep-rooted fear among the
French of losing their labor and social protection in a globalized world.
In a television interview on Monday evening on the private channel TF1,
Prime Minister de Villepin, who had been widely hailed as a possible
center-right candidate in the May 2007 presidential elections, said he hoped
to learn lessons from what he called "an extremely difficult time,"
contending that he had never harbored presidential aspirations.
"I have always indicated that I did not have presidential ambitions," said
Mr. de Villepin, who had drafted and pushed the law.
His sober, subdued demeanor contrasted sharply with his defiant and angry
stance in defense of the law in recent speeches before Parliament, in which
he proclaimed that the future of the youth of France was at stake and vowed
not to back down.
Both in his television interview and in a brief televised address earlier in
the day, Mr. de Villepin blamed the French people's fears and anxiety for
the defeat of the measure.
"The necessary conditions of confidence and calm are not there, either among
young people, or companies," he said in the television address.
The abolition of the law was announced without fanfare, in a terse,
one-sentence communiqué from Élysée Palace: "Under the proposal of the prime
minister and after having heard the presidents of the parliamentary groups
and the officials of the parliamentary majority, the president of the
Republic has decided to replace Article 8 of the law on equality of
opportunities by a mechanism in favor of the professional integration of
young people in difficulty."
To replace the defunct youth labor law, senior lawmakers from Mr. Chirac's
party presented a much weaker draft law to Parliament on Monday.
The new proposal would give employers financial incentives to encourage the
hiring and training of young workers, and give job seekers more guidance and
increase internships in areas where jobs are relatively plentiful, including
restaurants, hotels and nursing.
There will be temporary subsidies or tax breaks for companies hiring
unskilled young workers permanently. The cost of these measures, about $363
million a year, would be financed through an increase in tobacco taxes.
In its initial form, the law allowed employers to fire new employees within
two years without cause. In the face of mounting pressure, Mr. Chirac
watered it down so that employers could subject new employees to only a
yearlong trial period, and then would have to offer a reason for any
dismissal.
Students and unions, bolstered by support from the opposition Socialists and
even some business leaders, had vowed to continue their street protests
until the law was rescinded.
The Socialists were quick to proclaim victory on Monday. "This is an
unquestionable retreat," François Hollande, the leader of the Socialist
Party, told reporters. "It is a grand success for the young and an
impressive victory for the unity of the unions."
Mr. Hollande, who has not ruled out running for president, said the crisis
offered the party "reasons to hope."
But it is much too early to predict how the government's defeat over the
jobs law will affect the presidential race.
Certainly, Mr. de Villepin is severely weakened. But as a former foreign
minister who never held elected political office, he always lacked the
obvious credentials to secure the nomination easily.
By contrast, Interior Minister Nicolas Sarkozy, who successfully avoided
having to use substantial force to calm the protests, has emerged stronger.
And as the leader of the governing center-right Union for a Popular Movement
Party, he has the power of the party machinery behind him.
In a poll published Sunday in the newspaper Le Parisien, 85 percent of the
respondents said they saw both Mr. de Villepin and Mr. Chirac as weakened by
the battle over the law, but 53 percent said it had improved Mr. Sarkozy's
standing.
In an interview that is to appear Tuesday in the center-right daily Le
Figaro, Mr. Sarkozy emphasized that this was not a moment for criticism of
the government. "Politics is a long-term affair," he said. "No one gains
from humiliation."
He went out of his way to declare his fidelity to Mr. Chirac, his longtime
political rival, saying, "Never, in a long time, have I been as in sync with
the president of the republic as in these last few weeks."
Instead, Mr. Sarkozy unleashed his criticism against the Socialist
opposition, saying: "The left has nothing to propose, nothing to say,
nothing to defend. It can only feed off the right's mistakes."
The Socialists have offered no plan of their own to modernize the labor
market. Nor is there a Socialist plan to reduce youth unemployment, which is
22 percent nationally, and more than double that in some of the poor suburbs
racked by rioting last fall.
Perhaps the most surprising setback for the government came when some
business leaders, who were supposed to find it easier to hire young workers
with the new law, began to criticize the government's handling of the
dispute and warned that a prolonged crisis could damage France economically.
In a statement on Monday, Medef, France's largest business federation,
expressed hope that the withdrawal of the law "marks the end of a crisis
that dented the credibility of our country."
The remarks of former President Valéry Giscard d'Estaing were just as
cutting. In an opinion piece in the weekly Journal du Dimanche, he accused
Mr. Chirac of a lack of leadership.
"It's high time to get out of this quagmire," Mr. Giscard d'Estaing said.
"The enemies of France have viewed these images with delight, and her
friends with consternation."